Which of the Following Statements Is FALSE

question 24

Multiple Choice

Which of the following statements is FALSE?

• A)To estimate a firm's enterprise value,we compute the present value of the free cash flows (FCF)that the firm has available to pay equity holders,but not debt holders.
• B)The NPV of any individual project represents its contribution to the firm's enterprise value.
• C)When using the total payout model,we discount total dividends and share repurchases,and use the growth rate in earnings when forecasting the growth of the firm's payout.
• D)In the total payout model,we first value the firm's equity,rather than just a single share.

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Definitions:

Contestable Market

A market with no barriers to entry or exit, where a company's prices and output are constrained by the threat of new entrants or competition rather than by existing competitors alone.

Public Interest Theory

A theory suggesting that regulations are created in response to the public's demand for fair and efficient markets.

Industrial Regulation

The older and more traditional type of regulation in which government is concerned with the prices charged and the services provided to the public in specific industries. Differs from social regulation.

Regulated Monopolies

Monopolies that are allowed to exist by the government but with restrictions and oversight to protect consumers' interests.